Origins of knowledge and innovation in R&D alliances: a contingency approach

Innovative performance is influenced both by the origins of the existing knowledge that is combined to generate innovation and by how economic actors search for new knowledge. Drawing on a sample of inter-firm dyadic R&D alliances, we found that whereas the integration of geographically distant knowledge and of organisationally proximate knowledge in R&D alliances are negatively related to the alliance innovative performance, search span positively moderates both relationships. We conclude that, in order to make the most of broad-span searching, firms participating in R&D alliances should integrate geographically distant but organisationally proximate knowledge. By doing so, firms take advantage of the diversity and novelty that characterises geographically distant knowledge, while preserving considerable levels of relative absorptive capacity that are needed for them to understand, internalise, and effectively use partners’ knowledge from different domains.     

The impact of R&D subsidy on innovation: evidence from New Zealand firms

This study examines the impact of government subsidy through R&D grants on innovation output for firms in New Zealand. Using a large database that links administrative and tax data with survey data, we find that R&D grants have a stronger effect on more novel innovation (e.g. applying for a patent or introducing new products to the world) than on incremental innovation (e.g. any product innovation) and that larger, project-based grants are more effective at promoting innovation than smaller, non-project-specific grants. There is little evidence that R&D grants have differential effects between smaller (<50 employees) and larger firms.     

Effect of new product alliances on building cross-functional capability: cross-fertilisation or cannibalisation?

ABSTRACT

The extant literature has focused mainly on how establishing alliances helps firms develop their capabilities within focal functional areas, while paying limited attention to the cross-functional effects of alliances. Drawing on the knowledge-spillover literature and resource-dependence theory, this study investigates the effects of new product development (NPD) alliances on building cross-functional capabilities, testing the influences of important organisational, strategic, and environmental contingencies. Based on survey data collected from 212 Chinese firms, the findings reveal that, for resource-abundant firms, R&D-focused NPD alliances have cross-functional fertilisation effects on marketing capabilities; whereas for resource-constrained or highly innovative firms such alliances cannibalise marketing capabilities; in dynamic markets, marketing-focused NPD alliances cross-fertilise technological capabilities, but such an effect is weaker in firms adopting a highly incremental innovation orientation. Overall, this study sheds new light on how NPD alliances affect cross-functional capabilities under important contingencies.     

Standards and innovation: US public/private partnerships to support technology-based economic growth

This paper examines how strategic alliances to create and use standards affect economic growth and development. The explanation of the link from standards to economic growth and development is through the effects of standards on the incentives to perform industrial research and development (R&D). We examine product standards, metrology traceable to national and international standards, and regulatory standards to address negative externalities. The paper develops a theoretical explanation for the link from standards to growth, survey/interview-guides to gather information from industrial R&D experts about the explanation, and case-study evidence about the explanation. We discuss the standard-setting process and explain that it entails strategic alliances among firms and with government involvement. Case studies of R&D projects in firms and in a national laboratory support the belief that standards implemented via strategic alliances leverage economic growth and development.     

Service-sector competition,innovation and R&D

The central prediction of the Aghion, Bloom, Blundell and Howitt model is an inverted U-shaped relationship between innovation and competition. The model is built on the assumption of a product market and has not yet been tested on the service sector. Using detailed firm-level data on Swedish service-sector firms, we find evidence of an inverse U-shaped relationship for exporting service-sector firms. A further breakdown of innovation expenditures shows that the inverse U-shaped pattern holds for intramural R&D and training, but not for extramural R&D. Finally, the results indicate that as competition increases, small firms tend to seek strategic alliances with competitors, whereas large firms tend to reduce collaboration with competitors. The behavior of large firms can partly be due to their superior capacity to handle innovation projects internally, which will become more important if increased competition results in higher pay-offs to innovation.     

An investigation over inbound open innovation in SMEs: insights from an Italian manufacturing sample

ABSTRACT

Building on the Open Innovation (OI) framework, the purpose of this paper is to examine the R&D inbound model of small and medium enterprises (SMEs). Specifically, we focus on the impact of different horizontal R&D collaborations on product innovation and innovation performance. Hypotheses are tested using a Probit/Tobit regression on an Italian sample of 2591 manufacturing SMEs. Our analysis shows that collaborating with different horizontal R&D partners brings to different innovation outcomes. In particular, R&D collaboration with universities has a positive impact on product innovation, but not on innovation performance. Whereas, R&D collaboration with research centres and other private companies has a positive impact on both product innovation and innovation performance. Our findings provide implications for SMEs managers and entrepreneurs who have to decide between R&D partners for their innovation strategy. Avenues for future research are discussed.     

Evidence on the impact of R&D and ICT investments on innovation and productivity in Italian firms

Both research and development (R&D) and information and communication technology (ICT) investment have been identified as sources of relative innovation underperformance in Europe vis-à-vis the USA. In this article, we investigate the R&D and ICT investment at the firm level in an effort to assess their relative importance and to what extent they are complements or substitutes. We use data on a large unbalanced panel data sample of Italian manufacturing firms constructed from four consecutive waves of a survey of manufacturing firms, to estimate a version of the CDM model of R&D, innovation, and productivity [Crépon–Duguet–Mairesse 1998. Research, innovation and productivity: An econometric analysis at the firm level. Economics of Innovation and New Technology 7, no. 2: 115–58] that has been modified to include ICT investment and R&D as the two main inputs into innovation and productivity. We find that R&D and ICT are both strongly associated with innovation and productivity, with R&D being more important for innovation, and ICT investment being more important for productivity. For the median firm, rates of return to both investments are so high that they suggest considerably underinvestment in both these activities. We explore the possible complementarity between R&D and ICT in innovation and production, but find none, although we do find complementarity between R&D and worker skill in innovation.     

Types of cooperation partners as determinants of innovation failures

In this paper we analyse if specific R&D cooperation partners are related to an increase in the probability of innovation failures in terms discontinuing innovation projects. We distinguish between seven different R&D cooperation partner types, and we discriminate between product innovation failures and process innovation failures. Using German Community Innovation Survey data we find that, firstly, each type of R&D cooperation partner has a different effect on innovation failures. Secondly, we show that product innovation failures and process innovation failures are not affected in equal measure by the same type of R&D cooperation partner. Our results suggest that while R&D cooperation with public research institutes is significantly and negatively related to the probability to cancel a process innovation project, the coefficient is positive but insignificant for product innovation failures. Firms conducting partnerships with suppliers, however, run the risk of both product and process innovation failures. In turn, cooperation with competitors is positively correlated only to process innovation failures.     

R&D strategy and innovation performance: the role of standardization

Firms now increasingly recognise the important role of R&D strategy in building technological advantage. However, few attempts have linked standardisation with specific R&D strategies in explaining innovation performance. To bridge this gap, this study empirically examines the relationships between R&D strategies, standardisation, and firms’ innovation performance. Based on a sample of 371 firms in China, we use structural equation modelling (SEM) and find that novelty-oriented R&D strategy generates greater accumulation of standardisation knowledge and standards diversity, while R&D openness only positively relates to this standardisation knowledge accumulation. Moreover, standardisation knowledge accumulation is positively related to both administrative and technical innovation performance, while a greater variety of standards only leads to higher administrative innovativeness. More importantly, our results reveal that accumulation of standardisation knowledge mediates the relationships between R&D novelty and administrative and technical innovation performances. Both the theoretical and practical implications that arise from these findings are discussed.     

The Cost of Misaligned Governance in R&D Alliances

Transaction cost economics argues that aligning transactionswith governance structures leads to more efficient outcomes.While empirical evidence demonstrates that firms choose governanceconsistent with transaction cost predictions, the performanceimplications of governance choices are less well explored. HereI examine the cost of misaligned governance in the context ofresearch and development (R&D) alliances. Two costs of misalignmentare evaluated: excessive contracting hazards and excessive bureaucracy.Using a sample of R&D alliances in the telecom equipmentindustry, I find that alliance governance selected accordingto transaction cost arguments improves collaborative benefitssubstantially over governance not so selected. Interestingly,governance misalignments imposing excessive bureaucracy reducecollaborative benefits more than misalignments imposing excessivecontracting hazards. These results provide empirical evidenceof the cost of misaligned governance and have implications forresearch on the limits of internal organization and links betweenorganizational form and innovation.     

Role of human resource practices in absorptive capacity and R&amp;D cooperation

This paper reconceptualises absorptive capacity as a strategic human resource construct and analyses its role in determining R&D cooperation and innovation in firms. In spite of widespread consensus on the role of absorptive capacity in innovation, the literature has so far concentrated only on traditional R&D and human capital based indicators of absorptive capacity. Furthermore, most firm-level studies investigating this relationship are cross-sectional in nature and there is need for longitudinal evidence. Employing the IAB Establishment Panel Survey on about 1200 private sector establishments in Germany during 2007–2011, we apply a structural model that links firms’ human resource practices, R&D collaboration strategies and finally their innovation outcome. Findings from the first stage of the empirical analysis suggest that adoption of employment practices positively affects horizontal, institutional and consulting-based R&D cooperation, while compensation programs positively affect only horizontal R&D cooperation. In the second stage, the effect of cooperative R&D conditioned upon human resource practices on innovation performance is examined. Results indicate that firms having institutional and consulting-based R&D cooperation relationships are more often associated with higher incremental product, process and new-to-market innovation, whereas the effect is relatively weaker in case of horizontal R&D cooperation.     

Impact of firm size and industry type on R&D efficiency throughout innovation and commercialisation stages: evidence from Korean manufacturing firms

Technological innovation through R&D is a critical element in enhancing and fostering firm performance. In particular, measurement of R&D efficiency throughout the innovation and commercialisation stages is important. However, almost of R&D efficiency-related studies assumed that R&D is a single stage. This study aims at analysing relative efficiency scores throughout the stages of the R&D process using a two-stage data envelopment analysis (DEA) model with a sample of 1039 Korean manufacturing firms. Based on our preliminary results, this study was extended by comparing subsample groups categorised by firm size and industry type. The key findings include: (1) firms show imbalanced R&D efficiency throughout the two stages and (2) R&D efficiency is different by firm size and industry type. The empirical results and findings may assist policy- and decision-makers to enhance R&D efficiency at the firm level. Moreover, introduction of the two-stage DEA model and comparative analysis methods to firm-level data contributes to scholars.     

Innovation and productivity in manufacturing and service firms in Catalonia: a regional approach

This article analyses the determinants of research and development (R&D) and the role of innovation on labour productivity in Catalan firms. Our empirical analysis found a considerable heterogeneity in firm performances between the manufacturing and service industries and between low- and high-tech industries. The frontiers that separate manufacturing and service industries are increasingly blurred. In Catalonia high-tech knowledge-intensive services (KIS) play a strategic role in promoting innovation in both manufacturing and service industries, and driving growth throughout the regional economy. Empirical results show new firms created during the period 2002–2004 that have a greater R&D intensity than incumbent firms (54.1% in high-tech manufacturing industries and 68.8% in high-tech KIS). Small and young firms in the high-tech KIS sector are very prone to carrying out R&D and they invest more in innovation projects. R&D expenditures, output innovation, investment in physical capital, market share and export have positive effects on labour productivity in both the manufacturing and service sectors. Firm size, on the other hand, has a positive effect on productivity in manufacturing industries but not in services.     

Innovation in R&D service firms: evidence from the UK

Research and Development (R&D) service firms make significant contributions to innovation in other businesses. The extant literature considers these firms a homogenous sub-group of Knowledge Intensive Business Service firms (KIBS). The objective of this study is to investigate how R&D service firms innovate and the variety of innovation practices within these firms. Employing data from semi-structured interviews with senior managers from 32 UK-based R&D service firms, we suggest that there are two different modes of innovation: in the first mode, R&D service firms innovate similarly to KIBS whose innovation is ad-hoc in nature and driven by customers’ requests; another group of R&D service firms innovate like New Technology-based Firms (NTBFs) relying more on structured in-house R&D activities.     

Does partner type matter in R&D collaboration for product innovation?

Most firms tend to utilise various types of R&D collaboration partners simultaneously and partnerships between different types of partners show different properties. Thus, the effect of R&D collaboration may vary depending on partner types. This study considers four partner types: competitors, customers, suppliers and universities. It empirically examines the effect of R&D collaboration with each type of partner on product innovation, employing the Korean Innovation Survey data. Results show that R&D collaborations with customers and universities have a positive effect on product innovation, whereas R&D collaborations with suppliers and competitors have an inverted-U shape relationship with product innovation. This result can provide an explanation to the chaotic results of previous research and assist managers in selecting appropriate R&D partner.     

Government grants,private R&D funding and innovation efficiency in transition economy

Although the development of the high-tech industry is part of the national agenda of many countries, particularly transition economies, few studies have analysed innovation efficiency in countries with environments unfavourable to high-tech industry development. This study explores the relationships of government grants, private R&D funding and innovation efficiencies of the high-tech industry in China. We use a stochastic frontier analysis model to study the roles of government and market mechanisms in high-tech industry innovation from 1995 to 2008. Findings show that government grants do not crowd out private funding, but stimulate private R&D expenditure. Private R&D funding has positively influenced innovation in the Chinese high-tech industry, and efficiency potentials are widely under-exploited. Additionally, government grants are observed to negatively impact innovation by large firms in the Chinese high-tech industry. Furthermore, we reveal that human capital can promote the innovation performance of high-tech firms, excepting those of medium scale. The findings provide insightful perspectives on China's high-tech industry.     

Measuring innovation in long product development cycle industries: an insight in biotechnology

This paper examines and measures innovation in the context of biotechnology firms by analysing the link between R&D, innovation performance and organisational growth. We conceptualise innovation performance as a latent construct with two dimensions: innovation efficacy and innovation efficiency. We use structural equations modelling to test the hypotheses on a data set from the biotechnology industry. Results support our innovation performance conceptualisation which is found to be especially useful to measure innovation in industries with long product development cycles. Findings also underline the importance of R&D knowledge creation for biotechnology firms.     

Converging scientific fields and new technological paradigms as main drivers of the division of scientific labour in drug discovery process: the effects on strategic management of the R&D corporate change

The thesis of this study is that the convergence of genetics, genomics and proteomics spurs new technological paradigms in medicine, which are generating a R&D corporate change: division of scientific labour of the drug discovery process by strategic alliances among firms in order to reinforce the integrative capabilities in different biomedical research fields and collective and cumulative learning between in-house R&D and external sources of innovation. This study shows, by key a case study of pharmaceutical companies, as scientific and technological paradigms in medicine are main drivers of industrial and R&D corporate change to enhance and accelerate the discovery process of ground-breaking drugs for more and more personalised healthcare.     

Research and development and trade policies for product innovation in the presence of foreign competition

This paper examines two policy instruments — a matching grant and import tariffs — for encouraging research and development (R&D) in product innovation by a domestic firm when it faces foreign competition. We do so by developing a theoretical model of product innovation where R&D effort is endogenous and its outcome uncertain. We examine the effects of a reduction in import tariffs on private expenditure on R&D, on public support for such R&D, and on total R&D expenditure. We find that in response to a reduction in import tariffs, the domestic firm always reduces its private R&D investments, but the total level of R&D expenditure (i.e., including public support) might go up depending on the level of tariffs. In particular, we find that it will go up if the initial level of tariff is higher than a critical level. When tariff is endogenous, we find that the socially optimal level of tariffs is positive. One finding that is of particular interest is that supporting private attempts to product innovate in the form of a matching grant program leads to a socially optimal level of product R&D.     

Assessing measurement errors in the CDM research–innovation–productivity relationships

ABSTRACT

The Crépon-Duguet-Mairesse 1998 article, known as CDM, initiated a structural econometric framework to analyze the relationships among research, innovation and productivity, which has been estimated most generally on the basis of cross-sectional innovation survey-type data. Some econometric implementations of the CDM approach have suggested that such data give useful but imprecise measures of the innovation output (share of innovative sales), and to a lesser degree of the innovation input (R&D). These ‘measurement errors’ may result in attenuation biases of the estimated R&D and innovation impact elasticities in the two basic CDM ‘roots’ relations of R&D to innovation and innovation to productivity, as well as in the extended production function à la Griliches linking directly R&D to productivity. Using a panel of three waves of the French Community Innovation Survey (CIS), we assess these biases and the magnitude of the underlying measurement errors, assuming mainly that they are ‘white noise’ errors. We do so by comparing two pairs of usual panel estimators (Total and Between) in both the cross-sectional and time dimensions of the data (Levels and Differences). We find large measurement errors on innovation output in the innovation–productivity equation, resulting in large attenuation biases in the related elasticity parameter. We also find smaller but sizeable measurement errors on R&D, with significant attenuation biases in the corresponding elasticity estimates, in the R&D–innovation equation and the extended production function. Simulations suggest that the measurement errors on innovation and R&D are unaffected by similar measurement errors on the capital variable.